Data from recent research shows that most retailers have merchandising software. And yet the upheavals caused by the pandemic, from supply chain disruptions to labor cost issues to skyrocketing online buying and new shopping patterns like BOPIS and curbside, created execution issues for many retailers. Technology alone can’t ensure merchandising success. In an era where the share of shopping done in store is steadily declining—eCommerce now makes up 60% of all retail sales, and Amazon accounts for nearly 40% of it—it’s critical that you get your inventory, location planning and merchandise execution right.
To get the most out of their technology investments and thrive in an omnichannel world, retailers need to start re-prioritizing merchandising—and the systems and processes that enable it—as part of the overall “supply chain.” Successfully bringing products to the customer means executing from the factory floor to the customer’s home, building a process that supports the item’s seamless journey. Every team at every link of the chain is a part of the process, and all systems need to work together to make sure sales, orders and inventory are accurate and flowing to every location. Retailers need to have rock-solid item set-up processes to ensure accurate product information across channels, forecasting and replenishment systems to prevent out-of-stocks and overstocks, and an effective way to plan locations and localize assortments. This includes e-commerce, which is likely your largest “location.”
Unfortunately, many retailers haven’t kept up their investments in their merchandising systems. Upgrades, maintenance and ongoing training is needed to make that seamless integration happen. They’ve allocated the lion’s share of resources to “sexier” tech, As a result, many retailers are still working in what Gartner calls a “transactional environment,” having to manually integrate and consolidate data across siloed systems within the supply chain rather than leveraging analytics to identify cross-functional issues and improve the customer experience.
Retailers who want their brick-and-mortar locations to survive and thrive in the omnichannel retail environment not only need to invest in the right location and space planning technology; they also need to put the right people and processes in place. Over the course of my career, I’ve worked with many consultants, partners and software providers to manage merchandise operations initiatives. I’ve found that the most successful initiatives share three key attributes:
1. A business case and a case for action. The pandemic has shot eCommerce and supply chain to the top of the priority list for most retailers. Merchandisers need to make a strong case for why their systems, and the in-store optimization they enable, are just as critical to overall supply chain and omnichannel success. One of the most effective ways to do this is to pilot initiatives and track the results. At one retailer I worked for, we piloted an inventory optimization program: We created planograms based on rates of sale and tied replenishment minimums to presentation minimums. All the inventory analysts needed to do was work the forecast history exceptions. The initiative was a success: We saw in-stocks go up and inventory come down. The right product was in the right stores at just the right levels. The success of the initiative convinced executive leadership that optimal merchandising could make a significant and measurable difference for the business. With early wins like this, you earn trust and credibility with the higher-ups and are more likely to get the funding you need for bigger initiatives.
2. Strong, aligned executive sponsors. A sponsor is someone who communicates and owns a strategy, advocates for the necessary resources, and measures what gets done. Unfortunately, most merchandising initiatives suffer from a revolving door of executive sponsors. Many projects, initiatives and even strategies fail due to lack of consistent, engaged sponsors and the right people in place to bring the strategy to life. To build an effective end-to-end, customer-centric supply chain, you need sponsorship at the CEO and CMO level, with support and oversight from the executive team. Chief Merchants, COOs and CIOs need to be on board and collaborating consistently together with a shared strategy. In recent research by Gartner, respondents identified weak cross-functional collaboration as one of the top five barriers to their supply chain success.
3. A team to drive the initiative and track progress. To ensure speed, you need a dedicated merchant and planning resource leading the effort, plus a small core team of “change agents” to drive the initiatives and evangelize for success. You should also have a weekly steering committee to track and measure progress, discuss obstacles to adoption and determine actions needed to close the gaps and ensure progress.
Choosing the right merchandising tools is essential. But just as essential is making sure that you give them the “care and feeding” they need to yield an ROI. With the right people, processes and technology in place, retailers can deliver in-store shopping experiences that will delight their customers and keep them coming back for more.
Kelly Breitenbecher is a CIO, COO, and executive leader in Digital and IT Strategy and Development. She has helped leading retailers including Advance Auto Parts, Petco and Circuit City, achieve digital transformations across all functions in retail and lead initiatives that build seamless end-to-end customer experiences.